Econ 101 Midterm 3
11) The principle of diminishing marginal utility says that A) total utility increases by smaller and smaller amounts as the quantity of the good consumed increases. B) total utility increases by larger and larger amounts as the quantity of the good consumed increases. C) marginal utility is negative as the quantity of the good consumed increases. D) total utility decreases as the quantity of the good consumed increases.
A
12) The above table gives some of Tammy's total and marginal utilities from comedy videos. Which of the following statements is true? A) Tammy's total utility from five comedy videos is 800. B) Tammy's marginal utility from the third comedy video is equal to 580/3. C) Tammy's marginal utility from the first comedy video is less than her marginal utility from the third comedy video. D) None of the above answers are correct.
A
13) Kelly's marginal utilities for magazines and packages of gummy bears are listed in the table above. For Kelly, what is the total utility received from consuming 5 magazines? A) 255 B) 25 C) 20 D) 5
A
14) A person's consumption possibilities is defined by the budget line because A) it marks the boundary between what can be produced and what is unattainable given the current state of technology and resources. B) it represents the individual's preference for different combinations of goods. C) all consumers must consume on their budget line. D) it marks the boundary between what is affordable and unaffordable
A
17) The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Peter prefers consuming ________ to consuming ________. A) 40 slices of pizza and 20 chocolate bars; 48 slices of pizza and 12 chocolate bars B) 48 slices of pizza and 12 chocolate bars; 24 slices of pizza and 24 chocolate bars C) 24 slices of pizza and 24 chocolate bars; 40 slices of pizza and 20 chocolate bars D) 32 slices of pizza and 8 chocolate bars; 16 slices of pizza and 16 chocolate bars
A
2) Melissa has an income of $240 a month to spend on tennis lessons and concert tickets. The price of a tennis lesson is $20, and the price of a concert ticket is $40. Melissa's real monthly income in terms of concerts is A) 6. B) 40. C) 20. D) 12.
A
20) Who benefits from a tariff on a good? A) Domestic producers of the good B) Foreign governments C) Domestic consumers of the good D) Foreign producers of the good
A
21) The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt. 21) In the figure above, U.S. consumers' ________ from the tariff is ________. A) loss; $176 million B) gain; $64 million C) gain; $128 million D) loss; $80 million
A
22) The above table shows Tammy's total utility from videos and CDs. If Tammy has $70 to spend on videos and CDs and if the price of a video is $10 and the price of a CD is $20, then Tammy maximizes her utility by purchasing A) 2 CDs and 3 videos. B) 1 CD and 5 videos. C) 3 CDs and 1 video. D) none of the above
A
23) Bobby spends $100 per month on pizza and CDs. His utility from these goods is shown in the table above. The price of a pizza is $10 and the price of a CD is $20. Bobby currently buys 2 pizzas and 4 CDs. To maximize his utility in the next period, he should A) buy more pizza and fewer CDs. B) stay with the current combination of goods. C) buy more of both goods. D) buy more CDs and fewer pizza.
A
26) A tariff is A) a tax on a good imported into a nation. B) a government imposed limit on the amount of a good that can be exported from a nation. C) an agreement between governments to limit exports from a nation. D) a government imposed barrier that sets a fixed limit on the amount of a good that can be imported into a nation
A
28) A tariff hurts A) consumers who pay more for the imported good. B) the government by decreasing its revenue. C) domestic producers who can't compete with cheaper imports. D) All of the above answers are correct.
A
36) Marginal utility theory predicts that as the price of coffee rises, the ________ a substitute for coffee ________ and the ________ coffee ________. A) demand for; increases; quantity demanded of; decreases B) supply of; decreases; supply of; increases C) demand for; decreases; demand for; increases D) supply of; increases; demand for; decreases
A
4) Utility is best defined as A) the satisfaction from consuming a good. B) the price of a good. C) the practical usefulness of a good. D) the amount one is willing to pay for a good.
A
40) Water has a ________ marginal utility and brings a ________ consumer surplus; diamonds have a ________ marginal utility and bring a ________ consumer surplus. A) small; large; large; small B) large; large; small; small C) small; small; large; large D) large; small; small; large
A
8) If marginal utility is positive but diminishing, as more units of a good are consumed, then the total utility from the good must be A) positive and rising at a decreasing rate. B) positive and rising at any rate. C) falling. D) positive and rising at an increasing rate
A
1) Which of the following is consistent with the assumptions of marginal utility theory? A) As Jose consumes more of one good, his marginal utility from consuming more of all good increases. B) As Jose consumes more of one good, his marginal utility from consuming more of that good decreases. C) As Jose consumes more of one good, his marginal utility from consuming more of all goods decreases. D) As Jose consumes more of one good, his marginal utility from consuming more of that good increases.
B
11) Based on the table below, at what world price would the country export the good? A) a price below $8 B) a price above $8 C) at only $8 D) It is impossible to say.
B
12) Suppose the world price of a good is $4. Based on the table below, the country would A) export 20 units. B) import 20 units. C) import 10 units. D) export 10 units.
B
13) The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter. 13) In the figure above, international trade ________ total surplus in the United States by ________. A) decreases; $2.56 billion B) increases; $1.92 billion C) increases; $4.8 billion D) decreases; $3.6 billion
B
17) The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter. 17) In the figure above, the United States ________ helicopters per year. A) imports 240 B) exports 480 C) imports 480 D) exports 720
B
18) If the newspaper reported that wearing plaid clothing was a sure way to obtain good grades, students' A) budget lines would rotate so that more plaid clothing would be purchased. B) preferences would change in favor of more plaid clothing. C) budget lines would shift rightward to compensate for the higher price of plaid clothing. D) none of the above
B
2) The table shows Elaine's utility from pizza and Pepsi. If Elaine consumes 2 slices of pizza and 3 Pepsis, her marginal utility from the fourth Pepsi is ________ units. A) 220 B) 40 C) 54 D) 60
B
20) Lisa spends all her income on pizzas and DVDs. The above table shows Lisa's marginal utility for pizza and marginal utility for DVDs. If the price of a pizza is $10 and the price of a DVD is $10 and Lisa has $60 to spend on the two goods, what combination of pizza and DVDs will maximize her utility? A) 3 DVDs and 3 pizzas B) 2 DVDs and 4 pizzas C) 3 DVDs and 5 pizzas D) 4 DVDs and 2 pizzas
B
22) A difference between a quota and a tariff is that A) a tariff generates a greater reduction in exports than does a quota. B) the government collects revenue from a tariff but does not collect revenue from a quota. C) a quota increases profits of domestic producers more than does a tariff. D) a tariff generates a higher price than does a quota.
B
22) Which two goods will most likely have indifference curves that are straight lines? A) beef and chicken B) blue and red balloons C) pizza and hair spray D) left and right shoes
B
24) Sonya's budget for magazines and chocolate bars is $50. Her marginal utility from these goods is shown in the table above. The price of a magazine is $5 and the price of a chocolate bar is $2.50. Sonya currently buys 2 magazines and 12 chocolate bars. To maximize her utility, she should A) buy more chocolate bars and fewer magazines. B) buy more magazines and fewer chocolate bars. C) buy more of both goods. D) stay with the current combination of goods.
B
3) Which of the following is NOT an assumption of marginal utility theory? A) Consumers maximize their total utility. B) As more of a good is consumed, the decrease in the marginal utility from the good means that the total utility from the good decreases also. C) A consumer derives utility from the goods consumed. D) Each additional unit of consumption yields additional utility.
B
3) With international trade, a country will export tires. Prior to international trade, the quantity of tires produced in the country ________ the quantity of tires consumed in the country. A) must be less than B) must equal C) might be more than, less than, or equal to D) must be more than
B
32) Suppose that the country of Pacifica sold its cars in Atlantica for less than it costs to produce the cars. Pacifica could be accused of A) avoiding import quotas. B) dumping. C) engaging in learning-by-doing. D) increasing its gains from trade.
B
35) Which of the following is a valid reason for protecting an industry? A) The industry is unable to compete with low-wage foreign competitors. B) None of the other reasons is a valid reason for protection. C) Protection keeps richer nations from exploiting the workers of poorer countries. D) Protection penalizes lax environmental standards.
B
37) The fact that rubies are more expensive than milk reflects the fact that for most consumers, A) the marginal utility from rubies equals that from milk. B) more milk is consumed than rubies. C) a quart of rubies is considered to be prettier than a quart of milk. D) the total utility from rubies exceeds that from milk.
B
38) With respect to water and diamonds, water A) has a higher marginal utility than diamonds. B) has a lower marginal utility than diamonds. C) is cheaper than diamonds because it has a higher total utility. D) is cheaper than diamonds because it has a lower total utility
B
4) Prior to international trade, the price of good X is lower in country A than in country B. This means that we know that A) country B has a comparative advantage in the production of product X. B) country A has a comparative advantage in the production of product X. C) country B has an absolute advantage in the production of product X. D) country A has an absolute advantage in the production of product X
B
5) Compared to the situation before international trade, after the United States imports a good, production in the United States ________ and consumption in the United States ________. A) decreases; decreases B) decreases; increases C) increases; increases D) increases; decreases
B
6) In the figure above, the marginal utility of the third crate of tomatoes for the person with total utility curve C is A) 45 units of utility. B) 13 units of utility. C) 32 units of utility. D) 16 units of utility.
B
9) The gains from trade that are possible when two countries have different opportunity costs for wheat and coffee are realized when A) the two countries continue to produce the same quantities of wheat and coffee. B) trade occurs and resources are reallocated within the two countries. C) each country has an absolute advantage in one of the two commodities. D) the demand curves in both countries shift inward.
B
1) International trade arises from A) absolute advantage. B) the advantage of execution. C) comparative advantage. D) importation duties.
C
10)The figure shows the market for shirts in the United States, where D is the domestic demand curve and S is the domestic supply curve. The world price is $20 per shirt. 10) In the figure above, international trade ________ total surplus in the United States by ________. A) increases; $320 million B) decreases; $256 million C) increases; $128 million D) decreases; $192 million
C
13) Jake spends $200 on fried chickens and Pepsi. The price of a fried chicken is $5 and Pepsi is $2.50 per bottle. With the quantity of Pepsi being measured along the vertical axis, the slope of Jake's budget line is ________ per fried chicken. A) 2 Pepsis B) 0.5 of a Pepsi C) -2 Pepsis D) -0.5 of a Pepsi
C
14) If two goods are perfect complements, then their A) indifference curves are positively sloped straight lines. B) marginal rate of substitution is infinity. C) indifference curves are L-shaped. D) indifference curves are negatively sloped straight lines.
C
14) When the United States exports a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus. A) increase; larger than; decrease B) increase; smaller than; increase C) decrease; smaller than; increase D) decrease; equal to; decrease
C
15) In the figure above, suppose the original budget line is BD. A rise in the price of a compact disc will A) result in a parallel leftward shift of the budget line. B) not move the budget line. C) rotate the budget line to AD. D) rotate the budget line to CD.
C
15) Robinson spends all his income on mangos and bananas. Mangos cost $3 per pound and bananas cost $1 per pound. The marginal utility is 24 for the last pound of mangos purchased and 10 for the last pound of bananas. To maximize his utility, Robinson should buy A) the present combination of goods. B) more mangos and fewer bananas. C) more bananas and fewer mangos. D) only mangos.
C
16) Indifference curves are drawn on a diagram with the A) price of a good on the vertical axis and its quantity on the horizontal axis. B) quantity of a good on the vertical axis and its price on the horizontal axis. C) quantity of one good on the vertical axis and the quantity of another good on the horizontal axis. D) price of one good on the vertical axis and the price of another good on the horizontal axis.
C
16) John either buys a steak or chicken when dining out. John's marginal utility for steak and chicken is given in the above table. If the price of a steak is $5 and the price of a chicken is $5 and John has $25 to spend on the two goods, what combination of steak and chicken will John consume to maximize his utility? A) 4 steaks & 3 chickens B) 1 steak & 4 chickens C) 3 steaks & 2 chickens D) 5 steaks & 6 chickens
C
18) The table above gives the utility from pens and pencils. If pens and pencils both cost $.25 each and the consumer has an income of $2.25, which of the following combinations maximizes the consumer's utility? A) 4 pens and 5 pencils B) 3 pens and 6 pencils C) 5 pens and 4 pencils D) 6 pens and 3 pencils
C
19) The indifference curves in the figure above (I1, I2, and I3) reflect Peter's consumption preferences. Which of the following combinations of goods does Peter prefer the most? A) 24 slices of pizza and 24 chocolate bars B) 32 slices of pizza and 8 chocolate bars C) 40 slices of pizza and 20 chocolate bars D) 48 slices of pizza and 12 chocolate bars
C
20) The rate at which Sam is willing to give up a gallon of gasoline to get one more pound of coffee, and remain on the same indifference curve is called his A) opportunity cost of coffee. B) personal price of coffee. C) marginal rate of substitution. D) opportunity cost of gasoline.
C
21) The indifference curves in the above figure could represent your indifference curves between A) Coke and Pepsi, which you consider perfect substitutes. B) eyeglass frames and eyeglass lenses, which you think are perfect complements. C) hot dogs and textbooks, which you think are neither perfect substitutes nor perfect complements. D) none of the above
C
23) The figure shows the market for shirts in the United States, where D is the U.S demand curve and S is the U.S. supply curve. The world price is $20 per shirt. The United States imposes a tariff on imported shirts, $4 per shirt. 23) In the figure above, with the tariff American consumers buy ________ million shirts per year. A) 48 B) 16 C) 40 D) 32
C
24) A key difference between tariffs and quotas is that A) consumers are hurt with quotas but not with tariffs. B) the government receives revenue with quotas, but the importer receives added profit with tariffs. C) the government receives revenue with tariffs, but the importer receives added profit with quotas. D) consumers are hurt with tariffs but not with quotas.
C
24) In the figure above, the MRS at point A is ________ the MRS at point B. A) less than B) equal to C) greater than D) not able to be compared to
C
25) A U.S. tariff on textiles would ________ U.S. clothing prices and ________ jobs in the U.S. textile industry. A) reduce; decrease B) raise; decrease C) raise; increase D) reduce; increase
C
28) The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. If Jane's total budget for magazines and CDs is $70.00 per week, what is her total utility at her utility maximizing consumer equilibrium? A) 30 units B) 1870 units C) 2480 units D) 210 units
C
29) Michael consumes only steak and lobster. Suppose that the price of steak rises. After Michael is back at equilibrium, compared to the situation when steak was cheaper, the marginal utility from the last steak will A) not have changed. B) have decreased. C) have increased. D) not be comparable with the marginal utility before the price hike.
C
3) In the figure above, which budget line results in the most real income in terms of compact discs? A) AD B) BD C) CD D) Real income is equal for all three budget lines.
C
31) The gains from free trade are enjoyed by a ________ number of people and the costs of free trade are imposed on ________ number of people. A) small; small B) large; large C) large; small D) small; large
C
31) The paradox of value is illustrated by the fact that A) teens buy designer jeans. B) gold and diamonds occupy little space. C) a pound of bread is cheaper than a pound of gold. D) if diamonds were free they would no longer be useful for engagement rings.
C
32) According to marginal utility theory, a rise in income will A) increase the marginal utility of all goods. B) increase consumption of all goods. C) increase a consumer's total utility. D) None of the above answers is correct.
C
33) Marginal utility theory shows us that water, which is very common, has a ________ marginal utility and a ________ total utility. A) large; large B) small; small C) small; large D) large; small
C
34) The paradox of value can be resolved by distinguishing between A) supply and quantity supplied. B) normative and positive statements. C) total utility and marginal utility. D) quantity demanded and quantity supplied.
C
4) A household's consumption choices cannot exceed limits created by A) only the prices of the goods and services that it buys. B) only the household's income. C) both the household's income and the prices of the goods and services that it buys. D) neither the household's income nor the prices of the goods and services that it buys.
C
6) Compared to the situation before international trade, after the United States exports a good, production in the United States ________ and consumption in the United States ________. A) decreases; increases B) decreases; decreases C) increases; decreases D) increases; increases
C
7) Movies are $10 a ticket, and DVD rentals are $5 a DVD. With movies on the vertical axis, the magnitude of the slope of the budget line is A) 2. B) 5. C) 1/2. D) 10.
C
8) The budget line can shift or rotate A) only when prices change. B) only when income changes. C) when either income or prices change. D) None of the above, because changes in income and prices do not shift or rotate the budget line.
C
8) When the principle of comparative advantage is used to guide trade, then a country specializes in producing only A) goods for which production takes fewer worker-hour than another country. B) goods for which production costs are more than average total costs. C) goods with the lowest opportunity costs. D) goods with the highest opportunity cost.
C
9) Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines? A) 20 B) 200 C) 40 D) 10
C
1) Jordan has two goods that he consumes this week. He can choose to go to the arcade and play video games or he can purchase baseball cards. The price of each video game is $.50 and each pack of baseball cards is $1. Jordan will spend all his allowance this week on these two goods. Jordan's consumption possibilities are listed in the table above. Which of the following combinations of video games and baseball cards is not attainable for Jordan? A) 3 video games and 3 sets of baseball cards B) 0 video games and 5 sets of baseball cards C) 8 video games and 1 set of baseball cards D) 10 video games and 3 sets of baseball cards
D
10) As Goldilocks consumes more gummy bears, her total utility ________ and her marginal utility from gummy bears ________. A) increases; increases B) decreases; increases C) decreases; decreases D) increases; decreases
D
10) Lizzie's budget line is shown in the figure above. If the price of a magazine rises, Lizzie's real income in terms of magazines books ________ and her real income in terms of cookies ________. A) increases; does not change B) increases; decreases C) decreases; increases D) decreases; does not change
D
11) Lizzie's budget line is shown in the figure above. If the price of a cookie falls, the budget line A) shifts rightward and its slope does not change. B) shifts leftward and its slope does not change. C) becomes flatter. D) becomes steeper.
D
12) Suppose that Dave has $200 to spend per week and he buys only magazines and pizza. The price of a pizza is $10 and the price of a magazine is $5. What is Dave's real income in terms of magazines? A) 10 B) 200 C) 20 D) 40
D
15) When the United States exports a good, U.S. consumer surplus ________ and U.S. total surplus ________. A) decreases; decreases B) increases; increases C) increases; decreases D) decreases; increases
D
16) Suppose sugar is exported from a nation. In the sugar market who does NOT benefit from the exports? A) domestic producers B) workers in the industry C) foreign consumers D) domestic consumers
D
17) George spends all his income on sandwiches and juice. George's utility is maximized when he is consuming sandwiches and juice so that the A) marginal utility from sandwiches equals the marginal utility from juice. B) total utility from sandwiches equals the total utility from juice. C) marginal utility from sandwiches is at a maximum. D) marginal utility per dollar spent on sandwiches equals the marginal utility per dollar spent on juice.
D
18)The figure shows the market for helicopters in the United States, where D is the domestic demand curve and S is the domestic supply curve. The United States trades helicopters with the rest of the world at a price of $36 million per helicopter. 18) In the figure above, international trade ________ producer surplus in the United States by ________. A) decreases; $1.92 billion B) increases; $3.6 billion C) decreases; $2.88 billion D) increases; $4.8 billion
D
19) If the United States imposes a tariff of $1 per imported shirt, the tariff will A) decrease imports of shirts into the United States. B) raise the price of a shirt to U.S. consumers. C) benefit U.S. shirt producers. D) all of the above
D
19) The above table shows Priscilla's marginal utility from the two goods she consumes, pizza and Pepsi. The price of a slice of pizza is $2 and of a can of Pepsi is $1. Suppose Priscilla has $6 to spend. If Priscilla chooses to eat 3 slices of pizza, A) she is maximizing her total utility. B) she is not equating marginal utility per dollar for pizza and Pepsi. C) she is not at a consumer equilibrium. D) Both answers B and C are correct.
D
2) The fundamental force that drives international trade is A) export licenses. B) importation duties and tariffs. C) absolute advantage. D) comparative advantage
D
23) Which of the following will change the slopes of your indifference curves between gasoline and movie rentals? A) only a change in your income B) Both a change in the price of either good and a change in income will change the slopes of your indifference curves. C) only a change in the price of either of the two goods D) a change in your preferences for either of the two goods
D
25) Suppose that you consume only pizza, which costs $4 per slice, and Diet Pepsi, which costs $2 each. The table above gives your utility from consuming these two goods. If your income is $14, which of the following consumption combinations will you choose? A) 1 slice of pizza and 5 Diet Pepsis B) 0 slices of pizza and 7 Diet Pepsis C) 3 slices of pizza and 1 Diet Pepsi D) 2 slices of pizza and 3 Diet Pepsis
D
25) The marginal rate of substitution is equal to the A) marginal cost of each good. B) slope of the demand curve. C) relative prices of the two goods. D) magnitude of the slope of the indifference curve.
D
26) Bobby consumes only chocolate ice cream and vanilla ice cream. He is spending all of his income. His marginal utility of chocolate is 200 and his marginal utility of vanilla is 200, and the price of chocolate is $1.00 per scoop and the price of vanilla is $2.00 per scoop. To maximize his utility, Bobby should A) buy no vanilla ice cream. B) buy more vanilla ice cream and less chocolate ice cream. C) not change his purchases between chocolate ice cream and vanilla ice cream. D) buy more chocolate ice cream and less vanilla ice cream.
D
27) The table above gives Jane's total utility from magazines and CDs. The price of a magazine is $4 and the price of a CD is $10. What is the marginal utility per dollar from CDs when the sixth CD is purchased? A) 15 units B) 30 units C) 40 units D) 5 units
D
27) When the United States imposes a tariff on a good, the amount of the ________ in U.S. consumer surplus is ________ the amount of the ________ in U.S. producer surplus. A) increase; smaller than; increase B) decrease; equal to; increase C) decrease; larger than; decrease D) decrease; larger than; increase
D
29) Almost all economists support protectionist policies because protection A) saves jobs. B) is a good way for governments in developed nations to raise revenue. C) prevents rich countries from exploiting poorer countries. D) Economists would not support any of the above reasons.
D
30) Jeremiah spends all of his income on oranges and cookies, which are normal goods. If Jeremiah's income decreases, he will buy ________ oranges and ________ cookies. His marginal utility from oranges will ________ and his marginal utility from cookies will ________. A) the same quantity of; fewer; remain constant; decrease B) fewer; fewer; decrease; increase C) more; more; decrease; decrease D) fewer; fewer; increase; increase
D
30) ________ occurs when a foreign firm sells its exports at a lower price than it costs to produce the goods. A) A tariff B) Comparative advantage C) Dumping D) Learning-by-doing
D
33) Which of the following is an explanation for the existence of trade restrictions? A) Tariffs generate revenue for the government. B) rent seeking C) inefficient quotas D) Both answers A and B are key explanations.
D
34) Rent seeking is one reason why countries choose to A) export and import the same goods. B) follow the theory of comparative advantage. C) work for freer trade. D) restrict trade.
D
35) Marginal utility theory predicts that if a consumer's income decreases, the consumer A) might either increase or decrease purchases of normal goods. B) buys fewer inferior goods. C) buys more of all goods. D) buys fewer normal goods.
D
39) Renee consumes pizza and rice. An increase in her income causes her to consume fewer pizzas and more rice. The change in pizzas consumed means that A) her total utility from consuming pizzas had been negative. B) her marginal utility from consuming pizzas had been zero. C) her marginal utility from consuming pizzas had been negative. D) pizza is an inferior good for Renee.
D
5) Given the budget line in the above figure, which of the following combinations of pizza and milk are affordable? A) 4 pizzas, 1 gallon of milk B) 0 pizzas, 10 gallons of milk C) 2 pizzas, 6 gallons of milk D) All of the above combinations are affordable.
D
5) Which of the following is NOT an assumption of marginal utility theory? A) More consumption yields more total utility. B) Marginal utility diminishes with more consumption. C) People derive utility from their consumption. D) Utility can be measured and the units of utility are precisely defined.
D
6) The above figure gives your budget line between CDs and magazines. Which of the following changes would NOT allow you to buy more CDs? A) A decrease in the price of magazines with no change in the price of CDs. B) A decrease in the relative price of CDs. C) An increase in income. D) None of the above answers is correct because all of the above changes allow you to buy more CDs.
D
7) Comparative advantage implies that a country will A) export those goods in which the country has a comparative advantage. B) export goods produced by domestic industries with low wages relative to its trading partners. C) find it difficult to conclude free trade agreements with other nations. D) import those goods in which the country has a comparative advantage
D
7) Total utility describes A) an increase in consumption multiplied by the gain in utility. B) total consumption multiplied by marginal utility. C) total consumption divided by marginal utility. D) the benefit gained from all consumption.
D
9) Marginal utility measures the A) additional cost of an additional unit of consumption. B) average utility from an additional unit of consumption. C) total utility from consumption. D) additional utility from an additional unit of consumption.
D
21) Given the data in the above table, if income is $16, and the price is $1 for a bottle of water and $2 for a hamburger, what is the quantity of water and the quantity of hamburgers that will maximize the consumer's total utility? A) 6 bottles of water and 6 hamburgers B) 5 bottles of water and 5 hamburgers C) 6 bottles of water and 5 hamburgers D) 4 bottles of water and 6 hamburgers
c
